What is « cloud computing »?

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Nowadays, computing is so decisively impacting our everyday life that everybody should have heard about recent evolutions of computing. One of them is the full 180° reversion of a trend: computing devices went from large systems (one core computer with many screens) to an independent device (the Personal Computer) and recently to the “all-internet model”, based notably on “cloud computing”.

1 What is cloud computing?

Cloud computing is the latest result of a classical economic trend applied to the computing industry: economies of scales via specialisation.
This trend has been described for long with the theory of comparative and absolute competitive advantages: As the organisation of the production of various goods slowly grew international, countries have specialized where they could position at their best compared to the other countries. The same evolution is experienced on the computing industry. It moves from the sale of goods to a business of services via the internet. It switches the business model from the sales of hardware and software to the rental of services.
Nowadays, most of the software you purchase (Office, Photoshop, games and obviously Windows!) are installed onto one specific PC and cannot be run simultaneously on another device. Cloud computing offers to run these applications not from your hard drive but from servers available via the internet and managed by external service providers. This principle, which has been existing for long (Hotmail, the first web-based mail service, was founded in 1996) is made available to all with the spread of high speed internet (Up to 70% of households are equipped with high speed internet).
The advantages it offers are on two levels:

• Mutualisation of capacities: A better repartition and mutualisation of computing capacities enables economies of scales, offers almost infinite capacities available for entities which could not access it previously , helps coping with usage pikes, eases the quick growth of web based applications, etc. It also makes hardware and software management more professional and reliable (safety of data, version upgrading, server physical upkeep etc.)
• Multiplication of access and usage: Multiple distant access to personal and professional data from any location, at any time, on any connected devices (PC, Smartphones, TV, cyber café, etc.)

The cloud encompasses three elements connected via the Web: a server, exploited with a platform which enables the hosting of applications

• The server is the hardware, the infrastructure. The infrastructure is composed of thousands of servers regrouped in farms that can be distant for thousands of kilometres and connected via the web. That’s the hardware: where the computing capacity lies and where the data are stored.
Users can rent computing and/or storage capacity to a platform operator, paying only for its actual usage: This is « Infrastructure as a Service: IaaS ». The typical clients are companies running their own web servers and/or platform but facing a shortage in capacity due to a pick of usage.

• The platform is the exploitation system of the cloud Computing. It matches computing and storing capacities with the demand all distributes it across the servers. Like the oligarchy in exploitation system on your traditional PC/Mac, there are only few companies mastering the competence to run a platform. Companies who developed their own application can rent the right to run them on a platform with the underlying servers. That’s «Platform as a Service: PaaS ». Applications must be compatible with the platform exactly like a software must be Mac Compatible to be run on a Mac. A Software Development Kit (SDK) is made available by the platform developer to help software developers build their own application or enhance an existent one. Typical client are developers of a web application not willing to invest on their own servers.

• Cloud based application are the software. This is final customer product and the only one visible by the masses. Web applications can be used on any connected end device via a web browser without requiring download or installation. Each time a user run this web based application, he is renting « Software as a Service : SaaS ». Here, the typical users can be you and me or professionals. The payer can be different from the end users.

So the Cloud can be defined by three points:
1. Full Externalisation: Hardware, administration and software
2. A never-reached-before flexibility of usage by combining Macro-infrastructure with multi-usage.
3. Universal availability with a browser and a connected monitor.

It is noteworthy that many services pretending to be “cloud based” only respect point 1 and 3, while the size of the infrastructure is not a key element.

2 The principle of the cloud has been existing for long but the new scale opens new perspectives

5 M u Outlook Local e-mail software linked with the server

70 M First architecture “in the cloud” with a Private network offer First “cloud based” architecture

70 M First Web based mail application (bought by Microsoft 1997) First large scale web application

250 M First “business” Cloud app. appear Cloud applications invades the professional market

720 M Amazon launches its PaaS offer Cloud becomes available for developers

1.1 Md Google offers web apps for free Application suites enables over the air synchronization on the cloud

1.6 Md An OS is made available on the web to run on and off line The full cloud architecture is made available for the public

Cloud applications appeared on the beginning of the 90’s with the externalization of services such as e-mail with company-specific services: Lotus, Outlook, etc..
While the principles were laid, the services remained restricted to specific services and were restrained by the installation of a “client” on the devices.
Then architectures like Citrix and other VPN, enabled a distant access more universal but remains affordable only for large companies.
At the end of the 90’s, the empowerment of the web enabled the launch of services dedicated for a large public : web based mail services, accessible via a simple browser (Netscape, Explorer etc.) as well as professional applications based on a cloud architecture (Salesforce, CRM application sold on a « SaaS » basis).
All this introduced Cloud architecture in the industry, but the logic of externalization was not pushed to completion. When Amazon launched its IaaS and PaaS offer in 2003, it really opened the system and the market to all internet players.

The arrival of Google and its large public targeting enabled a vulgarization of the web application usage. It also gradually introduced an essential element: the ability for these applications to be run offline within the browser. Then applications and offers started to mushroom on the internet: From big players such as Microsoft’s Mesh de Microsoft or Mobile-Me from Apple but also from thousands of start-ups which offered a complete services with data cloud storage and web based application and access.

Since the principles were already accepted in 1990, what really changed within 20 years?

First of all the usage of Internet soared worldwide during these two decades: In quantity but also in quality, with the deployment of high speed internet in the countries were internet penetration was high. In the meantime the devices equipment rate grew as well as the number of device that could connect on the internet: PC, Laptops, Smartphones, netbooks, tablets, etc. The browser also improved offering user friendly and advanced interface along with Offline capacities: (Google Gears for instance).

On the other end of the chain, the creation of farms gathering millions of servers operated by flexible platforms truly overhauled the IT industry. It created decisive capacities unreached before:

• Scalability: Rental of infrastructure to match the pikes of usage in terms of computing capacity. This offer is dedicated to platform owner and specialists (Research Labs or administration)
• Flexibility: Storage and computing capacity are immediately available and almost infinite, thus reducing usage time.
• Democratization: The application is no longer restrained by the capacity of the end user’s device
• Cost reduction: The pay-per-use scheme is efficient and does not require upfront payment.
• Mobility: Data and applications are accessible via the Web and therefore from almost anywhere and any device.
• Distant and shared access to a unique content: Applications can easily be developed and shared. Databases are synchronized for every user in real time.

All this enables start-ups to concentrate on the front end application without having too much to invest on the back end. The most successful ones have coped with their striking success and growth thanks to the cloud services. Otherwise they should have invested billions in servers and infrastructures and/or lower their level of services, which could have sunk them. The Cloud has renewed the creativity of the start-ups in terms of services but also in terms of Business model, which are no longer limited by IT.

Morand Studer and the eleven Telecom team